Woodside's problems spark $1b blow

Resources reporter

Close to $1 billion was wiped off the value of Woodside Petroleum on Wednesday after it downgraded its production estimates for 2013.

Problems at its Pluto and Vincent assets prompted the oil and gas giant to downgrade its production forecasts by more than 5 per cent.

The revised figures mean that no more than 89 million barrels of oil equivalent will be produced in 2013, down from the previous forecasts that tipped production could rise as high as 94 million barrels of oil equivalent.

The biggest factor in the downgrade was an unplanned shutdown at the company's flagship $15 billion Pluto LNG plant in Western Australia, which was still out of action at the time of going to print.

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That issue was compounded by delays in refurbishment works on the Vincent production vessel, located in waters about 50 kilometres from the WA town of Exmouth. That asset could be out of action until October.

When combined, those two problems are expected to deny Woodside about 3 million barrels of oil equivalent, suggesting the company has shaved a little extra off its forecasts for good measure.

Analysts at Goldman Sachs said such events were not uncommon in the oil and gas industry and there was no need for investors to panic at this stage. ''While disappointing for 2013 earnings, these represent a deferral of production and are unlikely to have a major valuation impact,'' the analysts wrote.

Woodside shares had been steady at about $35.30 for most of the day, but release of the news saw the stock plummet as low as $34.05 within minutes. It finished the day 3.4 per cent lower at $34.62.

The downgrade came as oil and gas multinationals enjoyed a win over market regulators in the US, where a court ruling deemed that new transparency rules had been wrongly interpreted.

A federal judge found that the US Securities and Exchange Commission was wrong to interpret the 2010 Dodd-Frank Act as requiring big resources companies to declare every payment to governments around the world.

The rule was to improve transparency in the industry, which often ventures into developing nations with serious corruption.